October 2, 2008,

When consumers hold private information about their tastes, companies can use nonlinear pricing as a screening mechanism to induce different types of customers to buy different products. Screening incentives may lead a firm to make a small version of its product "too small" in order to collect more profit from consumers who purchase the larger version. A study in the RAND Journal of Economics shows that firms distort the products.

Brian McManus of the University of North Carolina at Chapel Hill used data from a specialty coffee market near the University of Virginia , where coffee shops follow the common practice that larger drinks have lower per-ounce prices than smaller drinks. McManus constructed a utility model to compare consumers' benefits and the shops' costs for an additional ounce of a drink. This provides an estimate of the average distortion in product size for consumers who self-select into each purchasing option.

Design distortions decrease with drink size for products with the largest profit margins. Product sizes are close to efficient for the largest, most expensive espresso drinks; this mirrors the "no distortion at the top" result of price discrimination theory. Distortions exist for the other drinks – these products are generally too small.

Researchers of Peter the Great St. Petersburg Polytechnic University (SPbPU) have developed a unique device for complex water purification that can improve or, in some cases, replace disinfection with chlorine.

A class of chemicals used in many industrial and consumer products was linked with greater weight gain after dieting, particularly among women, according to a study led by Harvard T.H. Chan School of Public Health. The chemicals—perfluoroalkyl ...

Genetically identical clonal ants show surprising diversity in their attraction to sweetness, according to new research in the journal Royal Society Open Science. While differences in behavior and preferences among a species ...

A new model based on ground-running birds could predict locomotion of bipedal dinosaurs based on their speed and body size, according to a study published February 21, 2018 in the open-access journal PLOS ONE by Peter Bishop ...

With the help of airborne laser mapping technology, a team of archaeologists, led by University of Arizona professor Takeshi Inomata, is exploring on a larger scale than ever before the history and spread of settlement at ...

Fake news is everywhere, but why we believe it is still unclear. Drawing on neuroeconomics research in an Opinion published February 20th in the journal Trends in Cognitive Sciences, psychologists suggest that valuing our ...